Grunar Industries produces the component parts needed for its popular non-commercial-use drones. One of the key...
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Grunar Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. If the company decides not to manufacture this part, a portion of its fixed manufacturing overhead costs would continue. The costs to produce one such part internally and to purchase on part from the suppler are given here. Costs to produce internally Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Cost to purchase from a supplier Portion of fixed manufacturing cost to continue $ 2.80 1.70 0.50 2.00 6.25 80% Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated. Complete the schedule to support the decision of whether to make or buy the part. Relevant Costs Relevant Cost to Make to Buy Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost Should Grunar continue to make the part or buy it from the supplier? Grunar should Grunar Industries produces the component parts needed for its popular non-commercial-use drones. One of the key parts has become more costly to produce than first planned, however, so management is considering outsourcing that part. If the company decides not to manufacture this part, a portion of its fixed manufacturing overhead costs would continue. The costs to produce one such part internally and to purchase on part from the suppler are given here. Costs to produce internally Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Cost to purchase from a supplier Portion of fixed manufacturing cost to continue $ 2.80 1.70 0.50 2.00 6.25 80% Required: Provide input into cells shaded in yellow in this template. Input the required mathematical formulas or functions with cell references to the Problem area or work area as indicated. Complete the schedule to support the decision of whether to make or buy the part. Relevant Costs Relevant Cost to Make to Buy Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total cost Should Grunar continue to make the part or buy it from the supplier? Grunar should
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Fixed costs are unavoidable and they would be incurred even if firm purchases products from vendors and so shall not be considered as relevant costs f... View the full answer
Related Book For
Managerial Accounting
ISBN: 9780073526706
12th Edition
Authors: Ray H. Garrison, Eric W. Noreen, Peter C. Brewer
Posted Date:
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